What is wrong with current reputation systems?

Chlu Team
Chlu Team
Jul 28, 2017 · 3 min read

Reputation has been at the center of how we make socioeconomic decisions for millennia. Reviews from our peers are central to how we make purchasing decisions — and yet, we don’t really have a good model for establishing the trust needed to have friction free engagement.

The value of reputation is now a well-established concept when it comes to online transactions. From hiring a cleaner to choosing a restaurant to eCommerce, reviews are invaluable when making a decision. By 2020, global eCommerce will be a 4 trillion dollar industry, and around 61% of these customers read reviews before deciding whether or not to buy.

Some marketplaces have been successful at creating a proxy for this trust that over time establishes reputation. However, online reputation management is deeply flawed in a couple of key ways.

The current flawed reputation systems

1. Your reputation isn’t portable

Marketplaces such as Amazon, eBay, and UpWork have created their own reviews and ratings systems to allow vendors to establish their reputation over time. Unfortunately, all of these solutions are walled gardens — managed ecosystems that are locked and closed. The reputation is non-transferable externally. Your reputation on eBay is meaningless on Amazon.

In an ideal world, you should own your data — not the marketplace.

There is huge value in having an established reputation that is portable across all ecosystems. No single organization should be a gatekeeper that must be trusted with a vendor’s reputation data. The future is trustless!

2. It is easy to cheat and game the current systems

From established players like TrustPilot to new entrants like Feefo, the problem is evident: the current systems are prone to being gamed. It is clear why — there are substantial incentives to cheat the system. Going from a 3-star rating to a 5-star rating gets a business 25% more clicks from Google Local Pack. The importance of ratings cannot be overstated.

While players like TrustedShops, Reevoo, and of course even Amazon themselves are trying to find solutions, fake reviews abound. Nearly 1 out of 5 reviews is marked as fake by Yelp’s algorithm. Even with a solution like TrustedShops where proof of purchase is necessary to leave a review, the reality is that ownership of the data in the purchasing chain is broken several times along the way.

Google even uses a long list of independent vendors that provide inputs to establish their seller ratings, and still it appears that approximately 15–35% of these are still fake.

How can this problem be solved? A universal platform based on real-world payments makes gaming the system far more difficult and costly. Decentralized ownership of the data coupled with required proof of purchase can eliminate fake and deceptive reviews.


The need for a universal, open, free-to-use reputation is clear

“An aggregated online reputation having a real-world value holds enormous potential for sectors where trust is fractured: banking; e-commerce, where value is exponentially increased by knowing who someone really is; peer-to-peer marketplaces, where a high degree of trust is required between strangers; and where a traditional approach based on disjointed information sources is currently inefficient, such as recruiting.” — Wired

Many businesses have tackled this problem over the last five years, and none have truly succeeded.

The future of reputation is decentralized.

Stay tuned…

-The Chlu Team

Chlu Network

Decentralised ratings and reviews - independently verifiable by proof of payment

Chlu Team

Written by

Chlu Team

Decentralised Ratings and Reviews - https://chlu.io

Chlu Network

Decentralised ratings and reviews - independently verifiable by proof of payment

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